Economic and Fiscal Overview
Ontario’s economy has proved resilient throughout the COVID-19 pandemic, worldwide supply chain disruptions, and the fastest rise in interest rates in recent Canadian history. The tariffs imposed by the United States now bring a significant new risk and are already having an impact on people and businesses on both sides of the border. With the 2025 Budget: A Plan to Protect Ontario, the government continues to make progress on its plan to build Ontario, with a stronger, more competitive, and resilient economy, while also taking a responsible approach to fiscal management.
Economic Outlook
Ontario’s economy proved to be resilient in 2024, continuing to grow and add jobs as inflationary pressures eased throughout the year. In 2024, real gross domestic product (GDP) increased by 1.5 per cent and employment rose by 140,000 (+1.7 per cent). Although there were solid gains in 2024, the uncertain economic environment is expected to weigh on the economy over the projection period.
Increased trade tensions from the U.S. are leading to greater uncertainty and contributing to a weaker global economic outlook. The rapidly evolving trade policy landscape is already weighing on businesses and consumers across the world. Ontario is among the Canadian provinces and territories most exposed to U.S. trade policy and related uncertainty, and its real and nominal GDP forecasts have therefore come down significantly. Real GDP is projected to rise by just 0.8 per cent in 2025 and only 1.0 per cent in 2026.
Fiscal Outlook
Ontario retains a path to balance by 2027–28. The government is projecting deficits of $6.0 billion in 2024–25, $14.6 billion in 2025–26, $7.8 billion in 2026–27, and a surplus of $0.2 billion in 2027–28.
The 2024–25 total revenue outlook is projected to be $221.6 billion, $13.4 billion higher than projected in the 2024 Budget, mainly reflecting increases in taxation revenue, other non-tax revenue, and net income from Government Business Enterprises. However, revenue projections for the medium term are lower than forecast in the 2024 Ontario Economic Outlook and Fiscal Review, in part because of a significantly weaker economic outlook.
Since the release of the 2024 Budget, the government has made targeted investments through the fiscal year to continue to make progress on its plan to build Ontario, while also investing in critical public services. The 2024–25 program expense outlook is $212.4 billion, $11.8 billion higher than in the 2024 Budget. Program expense is projected to grow from $195.2 billion in 2023–24 to $217.9 billion in 2027–28.
Ontario is forecast to pay $15.2 billion in interest costs in 2024–25, less than the forecast in the 2024 Budget, mainly due to lower than projected borrowing costs. Interest and Other Debt Servicing Charges expense is projected to increase from $14.5 billion in 2023–24 to $17.8 billion in 2027–28. The net debt‐to‐GDP ratio in 2024–25 is forecast to be 2.9 percentage points lower than in the 2024 Budget primarily due to much stronger real and nominal GDP growth in 2024 and a lower than forecast deficit.
Key debt metrics remain some of the best seen in this province in over a decade and the province is well positioned to protect workers and businesses. This year’s plan incorporates levels of prudence only previously seen during the 2008-09 Global Financial Crisis and COVID-19 pandemic. This leaves room to respond quickly and effectively should U.S. trade aggression continue.